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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Models where firms agree to mutually improve their situation






2. Entry of new firms shifts the cost curves for all firms upward






3. Entry (or exit) of firms does not shift the cost curves of firms in the industry






4. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






5. The most desirable alternative given up as the result of a decision






6. Entry of new firms shifts the cost curves for all firms downward






7. Product demand - productivity - prices of other resources - and complementary resources






8. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






9. The additional benefit received from the consumption of the next unit of a good or service






10. Ed = 8 - infinite change in demand to price change






11. Costs that change with the level of output. If output is zero - so are TVCs.






12. Exists if a producer can produce more of a good than all other producers






13. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






14. The difference between total revenue and total explicit and implicit costs






15. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






16. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






17. The lost net benefit to society caused by a movement away from the competitive market equilibrium






18. Exists if a producer can produce a good at lower opportunity cost than all other producers






19. The practice of selling essentially the same good to different groups of consumers at different prices






20. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






21. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






22. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






23. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






24. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






25. The rational decision maker chooses an action if MB = MC






26. AVC = TVC/Q






27. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






28. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






29. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






30. The total quantity - or total output of a good produced at each quantity of labor employed






31. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






32. The additional cost incurred from the consumption of the next unit of a good or a service






33. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






34. 0 < Ei < 1






35. A good for which higher income increases demand






36. Ed = 0 - no response to price change






37. ATC = TC/Q = AFC + AVC






38. The imbalance between limited productive resources and unlimited human wants






39. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






40. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






41. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






42. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






43. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






44. A firm that has market power in the factor market (a wage-setter)






45. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






46. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






47. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






48. Ed < 1






49. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






50. When firms focus their resources on production of goods for which they have comparative advantage